HONG KONG — Esprit Holdings said it expects to see a 47 percent to 58 percent drop in net profit for the six month period ending in December as unusually warm weather in Europe and some special return agreements in China dented sales.
The Hong Kong-listed clothing maker said net profit for the second half of 2014 should be between 40 million Hong Kong dollars, or $5.2 million, and 50 million Hong Kong dollars, or $6.4 million, down from 95 million Hong Kong dollars, or $12.3 million, in the same period a year ago.
Weather in Europe was unusually warm for a prolonged period for much of the six month period resulting in “much lower than expected sales of our autumn/winter products” while the return agreements in China — put in place to addressed aged inventory in the wholesale channel — also hurt sales, Esprit said.
Despite the lower than expected net profit, Esprit said it is continuing to devote “maximum efforts to significantly improve our products, particularly in terms of design, quality and value for money.”
Esprit shares closed down 3.57 percent on Wednesday after the clothing maker posted the preliminary results in a filing with the Hong Kong stock exchange. Interim results will be released in February.
Esprit, which swung into the black at the net profit level for the year ended June 30, has been embarking on ambitious multiyear restructuring plan, closing unprofitable stores, reducing the selling space of others and trimming advertising budgets.
In September, José Manuel Martinez Gutierrez, the group chief executive officer, said Tuesday he was pleased with the results and believes the company has “turned a corner” in its road to recovery but warned that plans to refurbish stores were taking longer than expected.